COMMISSIONER OF INCOME TAX, RAJKOT V. LAKHABHAI LAVJIBHAI

ITR/302/1995

AI Insights

The case involves a dispute between the Commissioner of Income Tax, Rajkot, and Lakhabhai Lavjibhai concerning the correctness of an assessment order under section 263 of the Income-tax Act. Initially, the Assessing Officer's order was set aside by the Commissioner under section 263, leading to a re-assessment. This re-assessment was later challenged and set aside by the Tribunal, which was then upheld by the CIT, Appeals. However, the High Court's earlier decision in CIT Vs. Lakhabhai Lavjibhai, which justified the CIT, Appeals' order under section 263, led to the current situation where the Tribunal's setting aside of the re-assessment was deemed incorrect, necessitating a re-hearing on the merits.

• Counselvise Citation: [2006] 140 COUNSELVISE.COM (IT) 717877 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 14-08-2006
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Lakhabhai Lavjibhai in ITR No. 11/91
• Laws Referred To: Income-tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SERVED BY RPAD N
• Assessee Lawyers: MANISH BHATT
• Keywords: Appeals; Assessment; Commissioner of Income Tax; Income Tax; Re-assessment; Tribunal
• Section: 143(3); 263; 144B

Judgement Text

"ITR/302/1995 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 302 of 1995 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX, RAJKOT - Applicant(s) Versus LAKHABHAI LAVJIBHAI - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, SERVED BY RPAD - (N) for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 14/08/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG) ITR/302/1995 2/4 JUDGMENT 1. At the instance of the Revenue, the Income-tax Appellate Tribunal, Ahmedabad Bench “C”, Ahmedabad, has made this Reference for opinion of this Court on the following question. “Whether, the Appellate Tribunal is right in law and on facts in confirming the order made by the Commissioner of Income-tax (Appeals) whereby he cancelled the order giving effect passed by the Assessing Officer pursuant to the directions given by the Commissioner of Income-tax under section 263 of the Act?” 2. The facts which are chequered, are required to be placed straight by creasing out the wrinkles. The original assessment was completed on 6.9.84 determining the total income at Rs. 74,870/- under section 143[3]/144B of the Income-tax Act, the order came to be set aside by the Commissioner of Income Tax under Section 263 of the Income-tax Act. The order passed under Section 263 of the Income-tax Act was subjected to an appeal to the Tribunal, but in the meanwhile, the assessing officer completed the ITR/302/1995 3/4 JUDGMENT assessment under section 143[3]/263 of the Income-tax Act on total income of Rs.7,94,870/-. The matter was taken in appeal. The Tribunal set aside the order of Commissioner, Appeals passed under section 263. The Commissioner, Appeals, against the second order of the assessment observed that as the order of the Commissioner, Appeals, passed under Section 263 has been set aside, consequent re-assessment cannot be allowed to stand. Against the said order, the Revenue went to the Tribunal and the Tribunal upheld the order of the CIT, Appeals. From the facts, it would appear that the first order of the Tribunal setting aside the order passed under section 263 was subjected to a Reference to this Court and Division Bench of this Court in the case of CIT Vs. Lakhabhai Lavjibhai in ITR No. 11/91 observed that the CIT, Appeals was justified in issuing an order under Section 263 of the Act. 3. Once the order passed by the Tribunal in which it had set aside the order passed under section 263 is set aside by the High Court, then, ITR/302/1995 4/4 JUDGMENT consequent proceedings cannot be set aside on this simple ground. The Commissioner of Income- tax, Appeals, in our considered opinion, though was not wrong when he passed the order, but because of the events and passing of an order by this Court has now become wrong. 4. As the order of the Tribunal setting aside the order passed under Section 263 has been set aside, subsequent order passed by the CIT, Appeals, against the re-assessment cannot be allowed to stand. The order passed by CIT, Appeals, dated 7.6.90 is hereby set aside. It is, however, ordered that the matter would be re-registered at its original number by the CIT, Appeals, for rehearing the parties on the merits of the matter. The Reference is answered in favour of the Revenue, but with reservations aforesaid. The Reference stands disposed of. No costs. [R.S. GARG, J.] [M.R. SHAH, J.] pirzada/- "